PARTNERS, contracts. Persons who have united together and formed a
partnership. 2. Every person sui juris is competent to contract the relation of
a partner. An infant may by law be a partner. 5 B & A. 159; but a feme
covert, not being capable of contracting, cannot enter into partnership; and
altbough married women are not unfrequently entitled to shares in banking
houses, and other mercantile concerns, under positive covenants, yet when this
happens, their hushands are entitled to such shares, and become partners in
their steads. Whether a feme sole trader in Pennsylvania could enter into such
contract, seems not settled. See 2 Serg. & Rawle, 189; see also, 2 Nott
& McC. R. 242; 2 Bay, 162, 333; Code Civ. par Sirey, art. 220.
3. Partners are considered as ostensible, dormant, or nominal partners. 1. An
actual ostensible partner is a party who not only participates, in the profits
and contributes to the losses, but.who appears and exhibits himself to the world
as a person connected with the partnership, and as forming a component member of
a firm. He is clearly answerable for the debts and engagements of, the
partnership; his right to a share of the, profits, or the permitted exhibition
of his name as partner, would be sufficient to render him responsible. 6 Serg.
& Rawle, 259, 337; Barnard. 343; 2 Blackst. R. 998; 17 Ves. 404;. 18 Ves.
301; 1 Rose, 297; 16 Johns. R. 40; 3 Hayw. R. 78.
4. - 2. A dormant partner is one who is a participant in the profile of the
trade, but his name being suppressed and concealed from the firm, his interest
is consequently not apparent. He is liable as a partner, because he receives and
takes from the creditors a part of that fund which is the proper security to
them for the satisfaction of debts, and upon which they rely for payment. 16
Johns. R. 40. Another reason assigned for subjecting a dormant partner to
responsibility is, that if he were exempted he would receive usurious interest
for his capital, without its being attended with any risk. 1 Dougl. 371; 4 East,
R. 143; 10 Johns. R. 226; 4 B. & A. 663; 8 Man. Gr. & Scott, 641, 650.
But in order to render one liable as a partner, he must receive the profits as
such, and not merely his wages; to be paid out of the profits. Vide Profits.
5. - 3. A, nominal partner is one who has not any actual interest in the
trade or its profits, but, by allowing his name to be used, he holds himself out
to the world as having an apparent interest. He is liable as a partner, because
of these false appearance he holds forth to the world in representing himself to
be jointly concerned in interest with those with whom he is apparently
associated. 2 H. Bl. 235; 1 Esp. N. P. O. 29; 6 Serg. & R. 338; Watts.
6. A partner in a private commercial partnership cannot introduce a stranger
into the firm as a partner without the consent of all the copartners. If he
should attempt to do so, this may make such stranger a partner with the partner
who has associated with such third person; this will be a partnership, distinct
from the first, and limited to the share of that partner who has so joined
himself with another. 2 Rose 255; Domat, de la Societe, tit. 8, s. 2, n. 5.
7. As between the members of a firm and the persons having claims upon it,
each individual member is answerable in solido for the amount of the whole of
the debts contracted by the partnership, without reference either to the extent
of his own separate beneficial interest in the concern, or. to any private
arrangement or agreement that may exist between himself and his copartners,
stipulating for a restricted responsibility. 1 Ves. & Bea. 157; 9 East, 527;
5 Burr. 2611; 2 Bl. R. 947; 1 East, R. 20; 1 Ves. sen. 497; 2 Desaus. R. 148; 4
Serg. & Rawle, 356; 6 Serg. & Rawle, 333; Kirby, 53, 77, 147. In
Louisiana, ordinary partners are not bound in solido for the debts of the
partner- ship; Civ. Code of Lo. art. 2843; each partner is bound for his share
of the partnership debts, calculating such share in proportion to the number of
the partners, without any attention to the proportion of the stock or profits
each is entitled to id. art. 2844.
8. Partners are bound by what is done by one in the course of the business of
the partnership. Their liability under contracts is commensurate and coextensive
with their rights. Although the general rule of law is, that no one is liable
upon any contract except such as are privy to it; yet this is not contravened by
the liability of partners, as they are imagined virtually present at and
sanctioning the proceedings they singly enter. into in the course of trade; or
as each is vested with a power enabling him to act, at once as principal and as
the authorized agent of his copartners. Wats. Partn. 167; Gow. Partn. 53. It is
doubtful, however, whether one can close the business by a general assignment of
the partnership property for the benefit of creditors. Pierpont and Lord v.
Graham. Cir. Court, April 1820, MS. Whart. Dig. 453, 1st ed.; 4 Wash. C. C. R.
232; see 1 Brock. R. 456; 3 Paige's R. 517; 5 Paige's R. 30; 1 Desaus. R. 537; 4
Day's. R. 425; 5 Cranch, 300; 1 Hoffm. R. 08, 511; Stor. Partn. §101; 2 Washb.
9. One partner can, in simple contracts, bind his copartners in transactions
relative to the partnership. 7 T. R. 207; 4 Dall. 286; 1 Dall. 269. But a
security given by, one partner, in the partnership name, known to be for his
individual debt, does not bind the firm. 2 Caines' R. 246; 4 Johns. R. 251; 4
Johns. R. 262, in note; 2 Johns. R. 300; 16 Johns. R. 34; 4 Serg. & Rawle,
397. Nor can one partner bind his copartners by deed; and this both for
technical reason and the general policy of the law. Wats. Partn. 218; Gow on
Partn. 83; 3 Murph. 321; 4 Sm. & Marsh. 261; 7 N. H. Rep. 549; 1 Pike, 206;
2 Harr. 147; 2 B. Monr. 267; 5 B. Monr. 47; 4 Miss. 417; 1 McMullen, 311; 3
Johns. Cas. 180; Taylor's R. 113; 2 Caines' R. 254; 2 Caines' Err. 1;. 2 Johns.
R. 213; 19 Johns. R. 513; 1 Dall. 11,9. But see 6 Watts & Serg. 165, where
it is said this rule admits of sorae qualifications. The rule does not however
apply to cases where the object is to discharge a debt as due to it; as to give
a general release by deed. 3 John. 68; 7 N. H. Rep. 550; 1 Wend. 326; 20 Wend.
251; 22 Wend. 324. It seems to be an admitted principle, that one partner has no
power to submit to arbitration any matters whatsoever, concerning or arising out
of the partnership business. Story, Partn. §114; Com. Dig. Arbitrament, D 2; 3
Bing. R. 101; 1 C. M. & R. 681; 1 Pet. R. 222; 19 John. R. 137; 3 Kent, Com.
49, 4th ed. But in Pennsylvania, 12 S. & R. 243, and Kentucky, 3 Mont. R.
433, one, partner may by an unsealed, instrument refer any partnership matter to
arbitration, though he has no implied authority to consent to an order for a
judgment in an action against himself and his copartner. 3 Mann. G. & Scott,
742. Nor has one partner the power to confess a judgment, or authorize the
confession of a judgment against the firm, when no writ has been issued against
both. 1 Wend. 311; 9 Wend. 437; 1 Blackf. 252; 1 Scamm. 428, 442. Such a
judgment, however is binding on the one who confessed it. 2 Bl. R. 1133; 1 Dall.
119; 1 W. & S. 340, 519; 7 W. & S. 142; 2 Caines, 254; 20 Wend. 609; and
see 7 Watts, 331; 1 W. & S. 519, 525; 2 Miles, 436; 1 Hoff. Ch. R. 525.
10. With regard to the tight of the majority of, the partners, when there is
a dissent among them, it may be laid down, 1. That when there are stipulations
on this subject, they must govern. Tum. & Russ. 496, 517. 2. In the absence
of all agreement on the subject, each partner has an equal voice, though their
interests be different, and a majority have a right to conduct the business. 3
John. Ch. R . 400; 3 Chit. Com. Law, 236; Colly. Partn. B. 2, c. 2, s. 1; Id. B.
3, c. 1, s. 262 - Story, Partn. 123. 3. When there are only two partners, and
they dissent, neither can bind the partnership, when the person with whom they
deal has notice of such disagreement. 1 Stark. R. 164. See 1 Camp. R. 403; 10
East, R. 264; 7 Price, Rep. 193; 6 Ves. 777; 16 Vin. Ab. 244. But this right of
the majority is confined to transactions in the usual scope of the business, and
not to a change of the articles of the partnership, for in such case all the
partners must consent, 4 John. Ch. R. 573.
11. The stock used in a joint undertaking by way of partnership in trade, is
always considered in common and not as joint property, and consequently there is
no survivorship therein; jus accrescendi inter mercatores, pro beneficio
commercii, locum non habet. On the death of one partner, therefore, his
representatives become tenants in common with the survivor, of all the
partnership effects in possession. But with respect to choses in action,
survivorship so far exists at law, as that the remedy or right to reduce them
into possession vests exclusively in the survivor; although when they are
recovered, the representatives of the deceased partner have, in equity, the same
right of sharing and participating in them which their testator or intestate
would have possessed had he been living. 1 Ld. Raym. 340. See 2 Dall. 65, 66, in
note; 1 Dall. 248; 4 Dall. 354; 2 Serg. & Rawle, 494.
12. When real estate is owned by a partnership, it is held by the partners
subject in all respects to the ordinary incident's of land held in common. 1
Sumn. R. 174; 7 Conn. 11; 5 Hill, (N. Y.) Rep. 118; 4 Mete. 537. But in equity
the partners may by agreement, express or implied, affect real estate with a
trust as, a partnership property, and, by that means, render it in, equity
subject to the rules applicable to partnership property as between the partners
themselves and all claiming under them. 2 Edw. R. 28; 2 Rand. R. 183; 7, S.
& R. 438, 441; Conn. 11; 5 Metc. 582; 6 Yerg. 20. See, generally, as to
partners, 5 Com. Dig. Merchant, D; Bac. Abr. Merchant, C; Wats. on Partn.
passim; Gow on Partn. passim; Supp. to Ves. jr. vol. 1, p. 36, 279 281, 312,
389, 449, 503; Id. vol. 2, p. 40, 314, 315, 317, 362, 364, 377, 384, 456; 1
Salk. 291, 392; 1 Swanst. R. 506, 9; 10 East R. 265; 4 Ves. 396; 1 Hare &
Wall. Sel. Dec. 292, 304; Civ. Code of Lo. B. 3, t. 11; Code Civ. L. 3, t. 9;
Code de Proc. Civ. L. 1, t. 3; Chit. Contr. 66 to 82; Poth. Contrat de Soeiete;
Bouv. Inst. Index, h. t. Vide Articles of Partnership; Death of. a partner;
Dissolution; Firm; Partnership.
PARTNERSHIP, contracts. An agreement between two or more persons, for
joining together their money, goods, labor and skill, or either or all of them,
for the purpose of advancing fair trade, and of dividing the profits and losses
arising from it, proportionably or otherwise, between them. 2 Bouv. Inst. n.
1435; Watson on Partn. 1; Gow on Partn. 2; see Civ. Code of Lo. art. 2772; Code
Civ. art. 1832; Forbes. Inst. of Scotch Law, part 2, B. 3, s. 3, p. 184; edit.
Edin. 1722, 12mo.; Dolmat, Civ. Law, vol. 1, p. 85; 9. John. R. 488; Puffend. B.
5, c. 8; 2 H. Bl. 246; 1 H. Bl. 37; Ersk. Inst. B. 3, t. 3, §18; Tapia,
Elemontos de Jurisp. Mercantil, p. 86; 5 Duv. Dr. Civ. Fr. tit. 9, c. 1, n, 17;
4 Pard. Dr. Com. n. 966; 2 Bell's Com. 611, 5th ed.; Aso & Mann. Inst. B. 2,
15. Sometimes partnership signifies a moral being composed of the reunion of
all the partners. 4 Pard. n. 966. As a partnership has a separate existence as a
person, it becomes liable to fulfil all its engagements, and the partners are
individually bound and responsible only on its default, as sureties. 2 Bell's
Comm. B. 6, c. 1, n. 4, p. 619, 5th ed.
2. Partnerships will be considered, 1st. In respect to their character and
extent, as they regard property. 2d. With relation to the number and character
of parties. 3d. As they are divided by the French code. 4th. As to their
creation. 5th. As to their object. 6th. As to their duration. 7th. As to their
dissolution. 8th. As to partnerships in Louisiana.
3. - §1. In respect to their character and extent, as they regard property,
partnerships maybe divided into three classes, namely: universal partnerships;
general partnerships; and limited or special partnerships. 1. A universal
partnership is one where the parties agree to bring into thefir m all their
property, real, personal and mixed, and to employ all their skill, labor, and
services, in the trade, or business, for their common benefit. This, kind of
partnership is perhaps unknown in the United States. 5 Mason, R. 176.
4. - 2. General partnerships are properly such, where the parties carry on
all their trade and business for their joint benefit and profit; and it is not
material whether the capital stock be limited or not, or the contributions of
the partners be equal or unequal. Cowp. 814. The game appellation is given to a
partnership where the parties are engaged in one branch of trade only.
5. - 3. Special partnerships, are those formed for a special or particular
branch of business, as contradistinguished from the general business or
employment of the parties, or of one of them. When they extend to a single
transaction or adventure only, such as the purchase and sale of a particular
parcel of goods, they are more commonly called limited partnerships. The
appellation is however given to both classes of cases indiscriminately. Story,
6. - §2. When considered in relation to the number and character of the
parties, partnerships are divided into private partnerships and public
companies. 1. Private partnerships are those which consist of two or more
partners for some private undertaking, trade, or business.
7. §2. Public companies are those where a greater number of persons are
concerned, and the stock is divided into a considerable number of shares, the
object embracing generally public as well as private interests. This term is,
however, perhaps loosely applied, as these companies have for the most part the
character of private associations. They are either incorporated or not. The
incorporated are to be governed by the rules established in their respective
charters. See Corporation. The unincorporated are in general subject, to all the
regulations of a common private partnership.
8. - §3. In the French law, partnerships are divided into three kinds,
namely: 1. Partnerships under a collective name, that is, where the name of the
firm contains the names of all or some of the partners.
9. - 2. Partnerships en commandite or in commendam; these are limited
partnerships, where one or more persons are general partners, and are jointly
and severally responsible with all their estates, and one or, more other persons
who furnish a part or the whole of the capital, who are liable only to the
extent of the capital they have furnished. The business is carried on in, the
name of the general partners. This species of partnership, with some modifica-
tions, has been adopted in several of the states of the American union. 3 Kent,
Com. 34, 4th ed.; 2 Bouv. Inst. n. 1473, et seq.
10. - 3. Anonymous partnerships are those in which all the partners are
engaged in the business, there is no social name or firm, but a name designating
the object of the association. The business is managed by syndics or directors.
Vide Poth. de Societe, h. t.; 5, Duv. Dr. Civ., Fr. h. t.; Pardes. Dr: Com. h.
t.; Code de Com. h. t.; Merl. Repert. h. t. In Louisiana a similar division has
been made. Civ. Code of Lo. h. t.
11. - §4. Partnerships are created by mere act of the parties; and in this
they differ from, corporations which require the sanction of public authority,
either express or implied. Aug. & Ames on Corp. 23. The consent of the
parties may be testified, either in express terms, as by articles of
partnership, or positive agreement; or the assent may be tacit, and to be
implied solely from the act of the parties. An implied or presumptive assent has
equal operation with one that is express and determined. And it may be laid down
as a general and undeniable proposition, that persons having a mutual interest
in the profits and loss of any business, or particular branch of business,
carried on by them, or persons appearing ostensibly to the world as joint
traders, are to be recognized and treated as partners, whatever may be the
nature of the agreement under which they act, or whatever motive or inducement
may prompt them to such an exhibition. 1 Dall. 269. 12. A community of property
does not of itself create a partnership, however that property may be acquired,
whether by purchase, donation, accession, inheritance or prescription. Civ. Code
of Louis. art. 2777. Hence joint tenants or tenants in common of lands, goods,
or chattels, under devises or bequests in last wills or testaments, and doeds or
donations inter vivos, and inheritances or successions, are not partners. Story,
13. Joint owners of ships are not, in consequence of such ownership, to be
considered as partners. Abbot on Ship. 68; 3. Kent, Com. 25, 4th ed.; 15 Wend.
187; and see Poth. De Societe, n. 2; 4 Pard. Dr. Com. n. 969; 17 Dur. Dr. Fr. n.
320; 5 Duv. Dr. Civ. Fr. n. 33.
14.- The free and personal choice of the contracting parties is so
essentially necessary to the constituting of a partnership, that even executors
and representatives of deceased partners do not, in their representative
capacity, succeed to the state and condition of partners; 2 Ves. sen. 34; Wats.
on Partn. 6; although a community of interest necessarily exists between them
and the surviving partners, until the affairs of the partnership are wound up.
11 Ves. 3. When there is a positive agreement at the commencement of the
partnership, that the personaI representative or heir of a partner shall succeed
him in the partnership, the obligation will be considered valid. Coll. on part.
B. 1; ch. 1, §11; Story, Partn. §5.
15. - §5. The object of the partnership must be legal. All partnerships,
therefore, which are formed for any purpose forbidden by law or good morals, are
null and void. But all the partners in such a partnership are jointly liable to
third persons who may contract with them without a knowledge of the illegal or
immoral object of the partnership. Civ. Code of Lo. art.- 2775; 5 B. & A.
341 2 B. & P. 371; 3 T. R. 454; Poth. Oblig. by Evaans, vol. 2, page 3; Gow
on Partn. 8; Wats. Partn. 131. Partnerships are not confined to mere commercial
trade or business; but generally extend to, manufactures and, to all other
lawful occupations and employments, or to professional or other business. They
may extend to all the business of the parties; to a single branch of such
business; to a single adventure; or to a single thing. But there cannot lawfully
be a partnership in a mere, personal office, especially when it is of a public
nature, requiring the personal confidence in the skill and integrity of the
officer. Story, Partn. §81; Colly. Partn. 31.
16. - §6. Partnerships may be formed to last for life, or for a specific
period of time; they may be conditional or indefinite in their duration, or for
a single adventure or dealing; this depends altogether on the will of the
parties. The period of duration is either expressed or implied, but the law will
not presume that it shall last beyond life. 1 Swanst. 521; 1 J. Wils. R., 181.
When a particular term is fixed, it is presumed to endure until the period has
elapsed; when no term is fixed, it is presumed to endure for the life of the
parties, unless previously dissolved, by the acts of one of them, by mutual
consent, or by operation of law. Story, Partn. §84. When no time is limited for
the duration of a general trading partnership, it is a partnership at will, and
may be dissolved at any time at the pleasure of any one or more of the partners.
17. - §7. A partnership may be dissolved in several ways: when the
partnership is formed for a single dealing or transaction, it follows that it is
at an end so soon as the dealing or transaction in which the partners jointly
engaged is completed. Gow on Partn. 268; Inst. Lib. 3, tit., 26, s. 6.
18. Where a general partnership is formed, either for a definite, or an
indefinite period of time, the causes which may operate a destruction of it, are
various. In the case of a partnership limited as to its duration, it may, in the
intermediate time, before the restricted period of its termination arrives, be
dissolved either by the death, the confirmed insanity, the bankruptcy of all or
one of the partners, or it may endure the stipulated period, and expire with the
effluxion of time; but where the partnership is unlimited as to its existence,
although in the instances of death or bankruptcy, it is determined, yet if they
do not intervene, any partner may withdraw himself from it whenever he thinks
proper. Code, lib. 4, t. 37, 1, 5.
19. Besides the causes above stated for a dissolution, a partnership, limited
or unlimited as to its duration, may be dissolved by the decree of a court of
equity, where the conduct of some or all of the partners has been such as not to
carry on the trade or undertaking on the terms stipulated; Gow on Partn. 269; or
by the involuntary or compulsory, sale or transfer of the partnership interest
of any one of the partners. 17 John. R. 525.
20. In New York, it has been held that there is no such thing as an
indissoluble partnership, and that, therefore, any partner may withdraw at any
time; and by that act the partnership will be solved; the other party having his
action against the withdrawing partner upon his covenant to continue the
partnership; 19 Johns. R. 538. This doctrine is not in accordance with the
English law. Indeed it is even doubtful in New York. Story, Eq. Jur. §668;
Story, Partn. §275; 3 Kent Com. 61, 4th ed.; 1 Hoffm. Ch. R. 534. See Gow on
Partn. 803, 305, and 4 Wash. C. C. R. 232.
21. It may also be dissolved by the extinction of the thing or object of the
partnership; or by the agreement of the parties. See Civ. Code of Louis. art.
2847 Code Civ. B. 3, fit. 9, c 4 art. 1865 to 1872; 2 Bell's Com. 631 to 6414,
6th ed. See Dissolution.
22. The effect of the dissolution of the partnership is to disable any one of
the partners from contracting new obligations or engagements on account of the
firm. 1 Pet., R. 351; 3 McCord, 378; 4 Munf. 215; 2 John., 300; 5 Mason, 56;
Harper, R. 470; 4 John. 224; 1 McCord, 338; 6 Cowen, 701. But notwithstanding
the dissolution there remain, with each of the partners, certain powers, rights,
duties, authorities, and relations between them, which are indispensable to the
complete arrangement and final settlement of the affairs of the firm. The
partnership must, therefore, subsist for many purposes, notwithstanding the
dissolution. Among these are, 1st. The completion of an the unperformed
engagements of the partnership. 2d. The conversion of all the property, means
and assets of the partnership, existing at the time of the dissolution, for the
benefit of those who, were partners, according to their respective shares. 3d.
The application of the partnership funds, to, the liquidation of the partnership
debts. Story, Partn. §324.
23. - §3. By the laws of Louisiana, partnerships are divided, as to their
object, into commercial partnerships and ordinary partnerships Commercial
partnerships are such as are formed, 1. For the purchase of any personal
property, and the sale thereof, either in the same state or changed by
manufacture. 2. For buying and selling any personal property whatsoever, as
factors or brokers. 3. For carrying personal property for hire, in ships or
other vessels. Civ. Code of Lo. art., 2796.
24. Ordinary partnerships are, such as are not commercial; they are divided
into universal or particular partnerships. Id. art. 2797.
25. Universal partnership is a contract by which the parties agree to make a
common stock of all the property they respectively possess; they may extend it
to all the property real and personal, or restrict it to personal only; they
may, as, in other partnerships, agree that the property itself shall be common
stock, or that the fruits only shall be such; but prop erty which may accrue to
one of the parties, after entering into the partnership, by donation,
succession, or legacy, does not become common stock, and any stipulation to that
effect, previous to the obtaining the property aforesaid, is void. Code Civ. of
26. Particular partnerships are such as are formed for any business not of a
commercial nature. Id. art. 2806. The business of thispartnership must be
conducted in the name of all the persons concerned, unless a firm is adopted by
the articles of partnership reduced to writing, and recorded as is prescribed
with respect to partnerships in commendam. Id. art 2808.
27. There is also a species of partnership which may be incorporated with
either of the other kinds, called partnership in commendam, or limited
partnership. Id. art. 799. Partnership in commendam is formed by a contract, by
which one person or partnership agrees to furnish another person or partnership
a certain amount, either in property or money, to be employed by the person or
partnership whom it is furnished, in his or their own name or firm, on condition
of receiving a share in the profits, in the proportion determined by the
contract, and of being liable to losses and expenses to the amount furnished,
and no more. Id. art. 2810.
28. Every species of partnership may receive such partners. It is therefore a
modification of which the several kinds of partnerships are susceptible, rather
than a separate division of partnerships. Vide Bouv. Inst. Index, h. t.: Firm.